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FSA U-turn on dual listing rules

The FSA has heeded the strong industry concerns over its dual listing proposals and will now consult on introducing a single listing regime for all UK and overseas closed end investment funds.

The Association of Investment Companies, leading advisers and MPs had warned that FSA plans to relax listing rules for overseas investment firms risked a repeat of the split-cap debacle and endangered investor protection.
The original proposals would have allowed overseas investment companies to list under the directive minimum chapter 14, meaning they would not have to declare crossholdings or have an independent board and could open up the potential for another ‘magic circle’ to be formed.
But in a statement released today, the FSA says it has reconsidered its proposals after listening to the concerns of the industry.
FSA wholesale managing director Hector Sants says: “Throughout our consultation on this aspect of the listing rules, we have been conscious of our responsibility to protect investors while having regard to the competitiveness of the UK market. We are persuaded by the responses that have indicated a preference for a single regime. This will form the basis of our proposals when we consult in June.
“The consultation has also sparked an important debate about the nature of the wider listed market and the segments of the listing regime that carry differing levels of regulatory requirements particularly with regard to overseas companies. We will explore those issues in a separate paper later this year.”
AIC director general Daniel Godfrey says: “This is very positive news. We were worried that a two tier regime would create substantial risks to both the industry and consumer and we are glad the FSA has listened.
This new consultation presents the opportunity to sweep away much of the red tape and outdated regulation to create a genuinely competitive single tier, that gives the consumer greater choice whilst also retaining important investor protections”.

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